STATE OF FLORIDA et al v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES et al

Filing 83

NOTICE Errata re Exhibits in support of 82 Defendants' Motion for Summary Judgment by TIMOTHY F GEITHNER, KATHLEEN SEBELIUS, HILDA L SOLIS, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, UNITED STATES DEPARTMENT OF LABOR, UNITED STATES DEPARTMENT OF THE TREASURY (Attachments: # 1 Table of Exhibits, # 2 Exhibit 1, # 3 Exhibit 2, # 4 Exhibit 3, # 5 Exhibit 4, # 6 Exhibit 5, # 7 Exhibit 6, # 8 Exhibit 7, # 9 Exhibit 8, # 10 Exhibit 9, # 11 Exhibit 10, # 12 Exhibit 11, # 13 Exhibit 12, # 14 Exhibit 13, # 15 Exhibit 14, # 16 Exhibit 15, # 17 Exhibit 16, # 18 Exhibit 17, # 19 Exhibit 18, # 20 Exhibit 19, # 21 Exhibit 20, # 22 Exhibit 21, # 23 Exhibit 22, # 24 Exhibit 23, # 25 Exhibit 24, # 26 Exhibit 25, # 27 Exhibit 26, # 28 Exhibit 27, # 29 Exhibit 28, # 30 Exhibit 29, # 31 Exhibit 30, # 32 Exhibit 31, # 33 Exhibit 32, # 34 Exhibit 33, # 35 Exhibit 34, # 36 Exhibit 35, # 37 Exhibit 36, # 38 Exhibit 37, # 39 Exhibit 38, # 40 Exhibit 39, # 41 Exhibit 40, # 42 Exhibit 41, # 43 Exhibit 42, # 44 Exhibit 43) (BECKENHAUER, ERIC)

STATE OF FLORIDA et al v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES et al

Doc. 83 Att. 18

Exhibit 17

Dockets.Justia.com

The

NEW ENGLA N D JOURNAL

of

MEDICINE

Perspective
Can States Pick Up the Health Reform Torch?
Sara Rosenbaum, J.D.

I

t is impossible to recall another time when a single incident -- in this case, the off-cycle election of a U.S. senator -- so thoroughly implicated the long-term direction of U.S. health policy. Washingward, some observers have once again focused on the states. To be sure, the Senate bill, unlike its House counterpart, uses a state-based approach to the operat ion of health insurance exchanges, the purchasing marts through which eligible individuals and small businesses would gain access to affordable coverage. But unlike independent state reforms, the House and Senate bills offer a national solution for the residents of all states, not just those who live in jurisdictions with the political and financial means to pursue change. Why Congress has reached a moment of national action is not hard to grasp. The insurance crisis has been with us a long time:
10.1056/nejmp1001439 nejm.org

ton is still taking the full measure of Senator Scott Brown's victory in Massachusetts, but among seasoned observers, the election's potential fallout for health reform was evident even before the first votes were cast.1 The political narrative of the Brown victory is the stuff of legend: the loss of a Senate seat held by an iconic figure who devoted his half-century political career to the very issue now at the center of events. The policy narrative is just as astounding, since Massachusetts' health care reform plan (for which Brown voted) provided the basic template for federal reform. Even as the White House and Congress struggle to move for-

only its magnitude has changed, with health care costs now exceeding 17% of the gross domest ic product and with 17 states in which 15% or more of the nonelderly population is uninsured.2 States have had decades to enact broad reforms, yet the record has been one of futility despite enormous effort. Massachusetts, the one standout in this regard, found itself in 2006 remarkably positioned to move. The state's social culture favored government involvement; its Republican governor and Democratic legislature aligned on a coverage mandate, greater insurance regulation, and strong Medicaid restructuring. A relatively low proportion of the population was uninsured, and the state enjoyed a seemingly healthy economy and the financial wherewithal to act (chiefly as a result of the Medicaid restructuring that was the basis of reform). As its financial
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PERSPECTIVE

C an States Pick Up the Health Reform Torch?

pict ure continues to erode, Massachuset ts now depends on a national solution to hold on to its gains, which makes particularly ironic the assertion of thencandidate Brown that national health care reform should be rejected because it would divert funds away from the state that it needs to maintain its program. Massachusetts must be understood as the rarity rather than the norm. In the best of times, most states could not repeat the experience in Massachusetts. To-

day, between surging numbers of uninsured, collapsing state economies (see table), and a decided shift in the culture and politics of government intervention, another Massachusetts is out of the question. Putting aside the immediate financial crisis, proponents of state action overlook the vast legal, political, operational, and economic barriers to sweeping state reform. The first hurdle is fiscal realit y; health care reform rests on an infusion of federal resources, giv-

en the reduced income of most uninsured Americans. No matter how health insurance reform is structured (subsidized private coverage, a single payer, or a combinat ion of approaches), insurance is astoundingly expensive. Cost estimates for employer group coverage (the most efficient market) in 2009 were $4,824 for an individual plan and $13,375 for a family plan.3 Making coverage affordable means a real investment in the population. This is especially true in states whose unin-

State Budget Cuts Made during Fiscal Year 2009 and Proposed for Fiscal Year 2010.*
St at e Fiscal Year 2009 Size of Cuts millions of $ Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota 697.4 11.7 554.0 64.9 10,654.5 144.0 341.4 247.0 887.4 2,262.2 86.2 241.0 600.0 529.7 108.8 155.3 163.2 341.0 74.1 470.9 1,271.0 438.0 426.3 X X X X X 232.3 448.0 2,424.0 1,832.0 2,280.3 X X X X X X 2,596.0 315.4 99.7 500.0 672.2 564.4 733.4 273.8 X X X X X X X X X X 20,363.5 926.5 52.8 751.0 X X X X 1,053.4 111.0 X Cuts to Medicaid Fiscal Year 2010 Size of Cuts millions of $ Mississippi Missouri Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Utah Vermont Virginia Washington West Virginia Wisconsin Total 635.0 31,318.1 X 27 764.0 470.4 214.0 1,106.4 0.4 127.2 571.3 68.0 480.3 255.0 X X X 808.3 318.6 98.0 854.6 1,335.0 184.0 1,917.7 55,654.8 X X X X X X X 28 X X X 136.0 81.1 2,000.0 282.1 413.0 1,221.0 1,093.0 X X X X X 471.7 988.0 1,172.8 415.6 328.3 X X X 3,284.0 539.1 6,047.0 X X X X X 182.4 Cuts to Medicaid S t at e Fiscal Year 2009 Size of Cuts millions of $ 199.9 430.0 X 480.0 X Cuts to Medicaid Fiscal Year 2010 Size of Cuts millions of $ Cuts to Medicaid

* Budgets for fiscal year 2010 are currently ongoing. Data are not available for Montana, North Dakota, Texas, and Wyoming. An X indicates cuts to Medicaid. Courtesy of the National Association of State Budget Officers.

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PERSPECTIVE

Can States Pick Up the Health Reform Torch?

sured populations are staggeringly large. (Texas and California together accounted for 12.7 million uninsured persons in 2008, more than one quarter of the uninsured.) A second hurdle is practical. If accessible private insurance is the goal, then states need to tackle the discriminatory tactics, such as price gouging and exclusion, that insurers use to deny enrollment or provide coverage that is grossly inadequate in relat ion to medical need. Even if individual states are willing to intervene, insurers are free to evade state regulation simply by pulling up stakes in any jurisdict ion with an unappealing polit ical and regulatory climate. State crackdowns make little headway; even California, the largest state, struggled to delay a proposed 39% rate increase by Anthem Blue Cross until the federal government intervened. The law represents a third hurdle. Even states that are willing to intervene find themselves powerless to reach more than half the group market as a result of the Employee Retirement Income Security Act (ERISA), which exempts from state regulation selff unded employer plans that use large insurers only as plan administrators. Self-funding is not only for jumbo employers anymore; thousands of smaller firms now self-insure to avoid state insurance laws and liability for premium tax payments. The final hurdle is the reality of health care today. The modern health care system is highly interdependent and operates across state boundaries. For example, health care providers in Washington, D.C., a place that has made a heroic effort to insure all residents, treat thousands of resi-

dents from Maryland and Virginia, whose public insurance programs are far less generous. Strategies for health care cost containment cannot be launched in individual states, because health care markets cross jurisdictional boundaries. Furthermore, in a modern economy, people need to be able to move interstate in order to pursue economic opport unit ies and participate in a changing labor market. Affordable health care is a national problem that demands a national solut ion. The House and Senate bills recognize that to succeed, health insurance reform must be undertaken on a nationwide scale. Both measures foster local innovation in health care delivery, pumping billions of dollars into the development of local capacity and improvements in quality and efficiency. But the legislative proposals correctly frame health care as too large, complex, and essential to the nation's wellbeing to relegate adequate coverage levels to the individual states any longer. To this end, pending proposals aim to build a uniform foundation of affordable health insurance resting on combined federal and state oversight to ensure fair practices: fair enrollment and pricing that does not discriminate on the basis of sex, age, or health status; fairness in the quality of coverage; fair informat ion and disclosure pract ices; and fair treatment of members, patients, and health care providers. Despite the obvious need for national action, recent weeks have seen a revival of the notion of independent state action (even as more than half of all states either are considering or have enacted legislation to nullify federal re10.1056/nejmp1001439 nejm.org

forms).4 A few states, such as California and Missouri, have considered more ambitious state plans, although Missouri officials have been frank in admitting that they are unable to address the affordability problem. Indeed, every state is now trying simply to hold the line against deep erosion in Medicaid coverage, with nearly all states contemplating terrible reductions in the number of people insured, the range of essential services provided, and already desperately low provider payment rates. Proposals from Congressional Republicans would considerably worsen matters for states. The most highly visible proposal can be found in A Roadmap for America's Future.5 Mirroring the Democratic proposals in its framing of health care reform as part of a more extensive strategy to deal with "America's long-term economic and financial crisis," the Roadmap acknowledges the rising cost of health care, the financial burden that it places on families and businesses, and the economic consequences for the nation. With rhetorical flourish, the Roadmap characterizes the Democratic reform legislation as a "job-killing" government intrusion on the health care system, asserting that the Republican approach would play a key role in "rejuvenating America's vibrant market economy; and restoring an American character rooted in individual initiative, entrepreneurship, and opportunit y." But it does not take long to see the Roadmap's real purpose: to shift the political and financial burdens of health care reform squarely back onto the states. A careful read of the Roadmap reveals a strategy in which a heavily deregulated insurance industry, operating with minimal federal
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PERSPECTIVE

Can States Pick Up the Health Reform Torch?

oversight, would be free to market national plans aimed at the general population. Premium subsidies -- financed by ending the favorable tax treatment given to employer-sponsored plans -- would be limited to $2,300 for individual policies and $5,700 for family coverage, about 48% and 41%, respectively, of the 2009 cost of an employer group premium. This means, of course, that the products marketed interstate would be bare bones and targeted to low-volume, healthy users. Under the plan, states would be expected to establish insurance exchanges, but since coverage of the young and healthy would be heavily tilted toward a stripped-down interstate insurance offering, the real purpose of the exchanges -- made clear by the Roadmap -- is to sponsor high-risk pools for uninsurable persons. As for subsidies for this enormously costly populat ion, the Roadmap states outright that "states may offer direct assist ance with health insurance premiums and cost-sharing" for this group, meaning that states are on their own. How the sponsors of the Roadmap think states

will fund this is a mystery: the proposal would replace Medicaid for the poorest families with vouchers and cap federal payments for long-term care for the disabled and elderly at the general rate of inflation (although more than two thirds of state Medicaid budgets are spent on the sickest beneficiaries). Rather than position states for innovation, the proposal would drive their health care systems to the brink. The United States has a strong tradition of federalism. Where health care is concerned, federalism has a central role to play, given the very local way in which health care is organized and delivered. But what does not vary -- from town to town, metropolitan region to metropolitan region, or state to state -- is the need for affordable, decent health care coverage, and it is a matter of vital national concern not to conf late the two. States may be health system innovators, but innovation in health care can happen only if it rests on a solid financial base. As in banking and other matters of national economic security, only the President and Congress -- acting on behalf of an elec-

torate possessed of the political will to move forward -- can create the financial conditions on which a 21st-century health care system necessarily rests.
Disclosure forms provided by the author are available with the full text of this article at NEJM.org. From the Department of Health Policy, School of Public Health and Health Services, George Washington University Medical Center, Washington, DC. This article (10.1056/NEJMp1001439) was published on February 24, 2010, at NEJM.org. 1. Balz D, Cillizza C. Senate election in Massachusetts could be harbinger for health-care reform. Washington Post. January 19, 2010. (Accessed February 23, 2010, at http://www .washingtonpost.com/wp-dyn/content/ article/2010/01/18/AR2010011803450.html.) 2. MacGillis A. With health bill stalled, what of the states? Washington Post. February 14, 2010:A4. 3. Kaiser Family Foundation. Employer health benefits: 2009 summary of findings. (Accessed February 23, 2010, at http://ehbs .kff.org/pdf/2009/7937.pdf.) 4. Jost TS. Can the states nullify health care reform? N Engl J Med 2010. DOI: 10.1056/ NEJMp10 01345. (Available at http://www .NEJM.org.) 5. Ryan PD. A roadmap for America's future, version 2.0. A plan to solve American's longterm economic and fiscal crisis. January 2010. (Accessed February 23, 2010, at http:// w w w.roadmap.republicans.budget.house .gov/UploadedFiles/Roadmap2Final2.pdf.)
Copyright © 2010 Massachusetts Medical Society.

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